Unit 17 Reading Activities Plus Questions

Read the following text and then complete the activities that follow.

Cost accounting

Management accounting is based heavily on cost accounting, but unless you have worked in this area you are unlikely to know exactly what it is. So, what is cost accounting?

At its simplest cost accounting is a method of evaluating the overall costs, both actual and notional, which are attributable to conducting business. This could be a per unit cost on goods produced, or a per hour cost for services provided. Generally based on standard accounting practices, it is one of the tools that managers use to determine what type of and how much expense is involved in maintaining the current business model.


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Quiz: Reading Questions

1. Cost accounting evaluates overall costs, actual and notional, and can be used to project changes of those costs.
2. Cost accounting helps in anticipating benefits, preparing budgets, analyzing feasibilities for expansion, and will result in cost reduction.
3. By limiting the costs incurred before profits, and by implementing the opportunity costs, the business will be successive.
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